Varoufakis sidelined as Tsipras steps in to negotiate with EU directly

It looks like the Greek finance minister may have had his day

Greek Finance Minister Yanis Varoufakis (EPA)

He has been the subject of a spoof video from Germany showing him giving the middle finger. But now Greek finance Yanis Varoufakis is facing enemies closer to home after being overlooked by his own party.

Varoufakis has been sidelined after failing to reach a crucial agreement with the EU to secure billions in bail-out money.

Alexis Tsipras, the Greek prime minister, has stepped in to reshuffle Varoufakis's team, which was supposed to be brokering the agreement, after negotiations took a nasty turn in Riga last week, according to the FT.

Jeroen Dijsselbloem, president of the Eurogroup, a group of finance ministers from countries that have adopted the euro, is said to have been contacting Tsipras directly, bypassing the finance minister.

Varoufakis quoted Franklin D Roosevelt on his Twitter feed in the aftermath:

Greece was hoping the Riga meeting would end in delivery of a €7.2 billion bail-out package. That never happened. Instead Athens is facing questions over a €2 billion wage and pensions bill and a €750 million loan repayment due in the coming weeks. The government has publicly acknowledged it may be forced to accept economic measures.

After Riga, Tsipras removed Nikos Theocarakis, who has been chosen to represent Greece at the negotiations, and handed the responsibility to Euclid Tsakalotos, the government's economics spokesman. Varoufakis will report to Tsakalotos, according to Greek newspaper To Vima.

The move will likely appease Eurozone officials, who have noted growing divisions between the premier and his finance minister. Tsipras has been under some pressure to get more involved in negotations.

It certainly appeased the Athens stock market, which rallied 4.4 per cent.